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Why Shares of Twist Bioscience Fell 19.92% on Tuesday


What happened

A day after synthetic biology and genomics company Twist Bioscience (NASDAQ: TWST) saw its shares rise 16.1%, they did a U-turn, falling 19.92% on Tuesday. The stock nearly matched its 52-week low and is a long way from its 52-week high.

So what

A report issued Tuesday by Scorpion Capital sent Twist’s shares plummeting. The report called Twist, among other things, “a cash-burning inferno” and a “Ponzi-like scheme,” adding that it “will end in bankruptcy.”

Twist issued a response on Tuesday saying that it believes the short-seller report issued by Scorpion is highly misleading, with many distortions and inaccuracies. The company’s 2022 fiscal full-year report is scheduled for Friday and a conference call will begin at 8 a.m. ET. Investors should keep in mind that short-sellers benefit when a stock they hold drops in price.

In its third-quarter report, released Aug. 5, Twist said it had $56.1 million in revenue, up 60.2%, year over year and 37.4% sequentially. It also said it lost $1.08 per share after listing a loss of $0.82 per share in the same quarter last year.

Now what

Where the biotech stock goes from here depends on how Twist responds on Friday and what its full-year report says. The company was founded in 2013 and had its initial public offering in 2018. It also sees potential uses for its synthetic DNA in data storage.

Quantum computing company IonQ, saddled with a similarly negative report from Scorpion in May, has seen its shares fall more than 66% this year, though only 28.4% of that fall came after the report.

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Jim Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Twist Bioscience Corporation. The Motley Fool recommends Mobileye N.v. Eo -,01. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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